Frequently
Asked
Questions

When it comes time to seek funding for your business, we know you have questions. Tenet Financial Group takes the time to answer them all, so you have complete peace of mind and confidence in whatever mode of funding you choose for your business.

From Rollover as Business Startups(ROBS) to applying for a Small Business Association (SBA) 7(a) loan, we have the answers.

Below are some of the most common questions we answer. If you can’t find the answer you’re looking for, please don’t hesitate to contact us today to speak with a Senior Consultant.

Frequently
Asked
Questions

When it comes time to seek funding for your business, we know you have questions. Tenet Financial Group takes the time to answer them all, so you have complete peace of mind and confidence in whatever mode of funding you choose for your business.

From Rollover as Business Startups(ROBS) to applying for a Small Business Association (SBA) 7(a) loan, we have the answers.

Below are some of the most common questions we answer. If you can’t find the answer you’re looking for, please don’t hesitate to contact us today to speak with a Senior Consultant.

General Questions

Why Choose Tenet Financial Group?

For starters, we’re not a sales company! We provide a very high level of customer service to ensure that the design, execution and administration of your fundingplan is perfect for your business. We know that this process is largely unfamiliar to most people, which is why we see a professional responsibility in educating, communicating and informing our clients—without sales pressure to complicate the situation.

What Types of Funding do You Assist With?

We specialize in Rollover as Business Startups(ROBS), helping you use your 401(k) to fund a new business startup. In addition to ROBS orchestration, we’re also experts in applying for SBA 7(a) loans. We can help you navigate the complexities of these funding opportunities, as well as apply for unsecured lines of credit.

What Kinds of Businesses do You Help?

Our specialty is working with entrepreneurs who are just getting started, and who want to pursue a franchise business. We also work with startups striking out on their own, under an independent business venture. Our capabilities extend to both brand-new startup companies and established businesses seeking an infusion of capital to help them grow.

How Long Does It Take to Get Funded?

Funding speed depends on the amount you’re financing and the product you’re applying for. In most cases, the average length of time to fund a corporation through ROBS is 3-4 weeks. Unsecured lines of credit can take as long as 5 weeksto process. SBA 7(a) loans tend to take much longer; however, SBA Express loans can see approval in 45-60 days.

Do I Need a CPA to Create a Funding Plan?

We highly recommend it. A well-qualified tax advisor is an integral part to the funding process. To ensure your opening balance sheet is correct and all ongoing administrative responsibilities are met, we recommend you meet with and retain the services of a certified tax advisor.

Do You Offer Audit Support if Needed?

As your Third-Party Administrator (TPA), Tenet Financial Group will maintain all records of funding associated with your startup—specifically the incorporation and 401(k) paperwork for ROBS or your SBA loan application documents. If you receive an IRS Inquiry letter, Tenet Financial Group would assist you in accurately answering all of the questions.

Since the IRS implemented its review process in 2008, Tenet Financial Group has never had a plan inquiry escalate into a full audit. If your plan is audited, we’ll assist until it’s complete.

Rollover as Business Startups (ROBS) FAQs

Are ROBS Legal? Does the IRS Recognize Them?

Absolutely! ROBS aren’t a “loophole” or a “workaround.” They are, in fact, recognized by the IRS. The legislation that allows a 401(k) plan to purchase stock in the plan sponsor was passed in 1974. Although retirement plans like this are prevalent with big corporations, their use in small corporations is relatively new. For that reason, your CPA or attorney may not be aware of it.

How Much Does it Cost to Set up a ROBS Plan?

Tenet Financial Group charges $4,995 to design and execute a ROBS strategy and accompanying401(k) Profit Sharing Plan. There’s also annual administration fee, billed monthly at $120 beginning the month after the effective date of the plan.

If I Fund a ROBS Plan, Can I Take a Paycheck?

Yes! You can pay yourself a salary as soon as you capitalize your business, which typically takes 4-5 weeks. We suggest consulting with your tax advisor regarding salary and payroll, to determine a fair salary that allows you to operate your business with confidence, without hampering its financial growth.

What types of Retirement Plans Qualify to Fund ROBS?

While IRA and 401(k) funds are the most common types of accounts rolled into ROBS, they’re not the only ones eligible. 403(b) plans, Simplified Employee Pensions (SEPs), Keogh Plans and Thrift Savings Plans (TSPs) all qualify.

Can I Use Other Sources of Funding as Part of a ROBS Strategy?

Many people who pursue ROBS not only rely on existing pre-tax retirement savings, but also Small Business Administration (SBA) loans and financial assistance. There are other opportunities to combine capital sources into an effective business strategy.

Can I Use ROBS to Start or Fund a Business with a Partner?

Definitely. The C-Corporation equity structure allows you to issue ownership stakes accordingly. Many people using ROBS to start a business do so alongside a business partner, spouse or advisor who can contribute to the business’ long-term success.

What Type of Businesses are Prohibited as ROBS?

IRS criteria for ROBS dictates that the business must be an “active operating company.” Businesses that do not fit this description include lending and investing companies, or single investments in real estate. Businesses must also be legal at the federal level.

How Active do I Need to be in the Business after it’s Funded?

Business owners need to maintain an active presence within the company and take a regular salary. IRS guidelines are purposefully ambiguous, and owners often have the ability to create their own role as an active employee.

Does the Business Need to Remain a C-Corporation Forever?

It’s best to keep the business as a C-Corporation for the life of the company. Transition to a different business model could trigger an early withdrawal penalty that applies to any and all funds used to purchase the business through the C-Corporation.

How do I Replenish my Retirement Savings?

You can contribute up to 100% of your salary to your new 401(k), up to the annual limit. If you’re age 50 or older, you can also make catch-up contributions to maximize retirement savings. There is no set repayment schedule for retirement savings.

SBA 7(a) and Express Loans FAQs

What’s the Maximum I can Borrow Through an SBA loan?

Most 7(a) loans have a maximum loan amount of $5 million. SBA Express loans have a maximum loan amount of $350,000. It’s important to realize that these are maximums, and the amount you’re eligible for is likely to be lower.

How Much do I Need as a Down Payment?

SBA-approved lenders typically want to see 20-30% down payment on the loan—even with an SBA Guarantee. Keep in mind that this represents a cash down payment, not the collateral you’ll use to secure the loan.

What Other Types of SBA Loans are There?

The SBA offers financial assistance programs outside of 7(a). Examples include: SBA Express Loans, 504 Loans, Microloans, Disaster Loans, Community Advantage Loans, Export Working Capital Loans, Export Express Loans and International Trade Loans.

How Much of the Loan Does the SBA Guarantee?

The amount of the loan guaranteed under the SBA Guarantee varies depending on the amount. Traditionally, the SBA will guarantee 85% of the loan up to $150,000 and 75% of the loan beyond that amount.

What Types of Businesses are Ineligible for SBA Loans?

Ineligible businesses include those engaged in illegal activities, loan packaging, speculation, multi-sales distribution, gambling, investment or lending, or where the owner is on parole. Tax-exempt businesses are also generally not eligible.

Can an SBA 7(a) Loan Finance the Purchase of a Franchise?

A franchise purchase falls under the realm of qualified expenses for SBA loans. That said, it’s important to make sure your franchiser is on the approved SBA franchisor list.This list includes businesses recognized by the SBA as legitimate franchise opportunities.

Can I Apply for an SBA Loan if Previously Denied?

Yes! There is no limit to the number of times you can apply for an SBA 7(a) loan. If you’ve been denied previously, it’s best to consult with a financial advisory firm that has expertise specific to SBA loans, to increase your chances of approval.

Let’s Work Together

Learning about business funding can be a daunting task when there’s so much to consider. Solution: fill out this quick form to request a call with a funding consultant.

We can’t wait to speak with you!

Contact us

Let’s Work Together

Learning about business funding can be a daunting task when there’s so much to consider. Solution: fill out this quick form to request a call with a funding consultant.

We can’t wait to speak with you!

Contact us

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